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UK questions if VI can repay loans

- Premier Smith was grilled by UK Member of Parliament on how the VI intends to repay the loans it is seeking
Minister of Finance and Premier, Dr the Honourable D. Orlando Smith (AL) was questioned Member of Parliament, Lloyd Russell-Moyle (right) on how the Virgin Islands (VI) intends to repay the loans borrowed to rebuild the territory following the passage of Hurricane Irma two month ago on September 6, 2017. Photo: VINO/Internet Source
The Virgin Islands was ravaged by Hurricane Irma on September 6, 2017 but is now seeking to rebuild. Photo: VINO
The Virgin Islands was ravaged by Hurricane Irma on September 6, 2017 but is now seeking to rebuild. Photo: VINO
Damaged vessels at Nanny Cay, Tortola following the passage of Hurricane Irma on September 6, 2017. Photo: VINO
Damaged vessels at Nanny Cay, Tortola following the passage of Hurricane Irma on September 6, 2017. Photo: VINO
ROAD TOWN, Tortola, VI - Premier and Minister of Finance, Dr The Honourable D. Orlando Smith (AL), who appeared before the International Development Committee of the House of Commerce in the United Kingdom on Tuesday, October 31, 2017 was grilled by Member of Parliament, Lloyd Russell-Moyle on how the Virgin Islands (VI) intends to repay the loans it is seeking.

The VI is set to benefit from the recent ruling by the Organisation for Economic Cooperation and Development (OECD) where the UK's Development Aid can be used for short term assistance for middle income countries.

However, as the territory struggles to get back on its feet with an impact of $3.6 billion in losses following hurricane Irma, the Virgin Islands will need millions to begin rebuilding.

Mr Russell-Moyle explained, “When natural disasters or human disasters hit, we have to step in, just like in 1993, when the City of London was bombed by the IRA; we stepped in. Since then, the City of London has paid, through its tax base, back the UK Exchequer many times."

He continued, “With BVI there is a lot of discussion about transparency of tax and openness of shell companies. Is that something that needs to be harnessed to make sure that money is used for the right purpose in the long term, so we know it is paid back?”

$60M in Reserve Fund

In response, the Minister of Finance commented that the VI is part of the international monetary system that works very well in terms of cross-border transactions, providing employment all around the world and is absolutely well regulated.

Not very pleased with the response by the Premier, Mr Lloyd Russell-Moyle questioned again, “I am asking more about how you leverage in the future, in the long term—because in the short term we have a duty to support the islands—so that these funds can be put aside for resilience and climate change, and how you are thinking about that. That is what I am trying to explore: the long-term plans for resilience-building.”

Dr Smith emphasised that the VI has already started to look at long term plans for resilience building, while recalling that seven years ago the VI started having reserve funds towards that kind of purpose.

“That is why we have at this moment over $60 million in that reserve fund. The financial service area will contribute to that fund, and we will continue to develop that, because we realise we need that kind of back-up in case of this kind of disaster,” explained the Minister of Finance to the committee.

Long term assistance needed

Meanwhile, the Premier explained to the committee that the territory needs long term assistance although the VI has received aid from the UK and other countries in the initial stage.

"Now we have to look at the long term, and because of the extent of the damage, we are not able to do that within our budget, so we will have to seek assistance in terms of loans and any other forms of financing we can," the Premier said.

The Member of Parliament pointed out that the VI has a higher Gross Domestic Product (GDP) per capita than Britain, while questioning if the VI is thinking about having reserved funds for climate change and other disasters in the future.

The Premier urged, "Even though we had a relatively high GDP before, right now if we do not get the kind of assistance that is needed to rebuild the economy, we will become a dependency on the United Kingdom, and that is something that we do not want and you do not want."

Dr Smith disclosed that the territory is not accustomed to being dependent on the UK, adding that they have always been able to take care of the territory's needs.

The leader of the territory said that the catastrophic hurricane is not something that the territory ever expected, “So we have to deal with it and we need assistance to deal with it.”

13 Responses to “UK questions if VI can repay loans”

  • ABC (10/11/2017, 17:13) Like (6) Dislike (3) Reply
    this man Doc can't handle pressure
    • ccc (11/11/2017, 00:57) Like (3) Dislike (0) Reply
      Poor bvi
    • nan (12/11/2017, 10:11) Like (2) Dislike (3) Reply
      What loans???? The UK are supposed to be giving us substadies because it is our mother country and she own these islands. Why in the world as a child repay my parents for feeding me, clothing me and keeping a roof over my head, when that is what they are supposed to do? This is a blatant way of making excuses because they don’t care about Black people, which most of us are down here. Yes, I said it because it is freaking “TRUE “
  • pat (11/11/2017, 00:58) Like (3) Dislike (1) Reply
    Bvi strong ndp weak
  • On the contrary (11/11/2017, 01:39) Like (0) Dislike (1) Reply
    DOC. ...FINALLY!!!...... YOU WERE HONEST! Maybe there is hope..... maybe the truth will set us free!
  • Ya me born (11/11/2017, 07:41) Like (4) Dislike (1) Reply
    Like I've always said the only people that we as black people can show off on is other black people.This is our wake up call to unite..take heed my people
  • E. Leonard (11/11/2017, 12:49) Like (3) Dislike (0) Reply
    The VI was hit hard by a series of weather systems, especially by Hurricane Irma. Some 80% of properties were damaged; estimated rebuilding cost is approx $3.6B. This is a huge tun ah money. No doubt, the BVI needs a huge infusion of external investment. What the BVI really needs is a Marshall Plan(plan named after US Secretary of State George Marshall); Marshall Plan, a US initiated action plan, was instrumental in Western Europe recovery after WWII. US contributed $13B to the recovery effort.

    Absent a similar action plan for the VI by developed countries, the VI will need to borrow a ton of cash for the recovery effort. Assuming that it get some grants and the UK will contribute some resources, how will VI payback the money it borrowed? Will the good faith and credit of government be enough for the lenders? Though the territory is burdened with taxes and fees, a multiple source recovery tax with a sunset clause may need to be imposed, i.e., vehicle registration, property ownership, visitors, employment, sales........etc. Residents should and must demand good stewardship of any recovery tax money. Recovery tax money must be fenced for only the recovery effort. From the key board, I can sense the question of what if next year another Cat 5 hurricane decimate the BVI. Well, this is the reality geographically of the VI location.
    • @E.Leonard (12/11/2017, 12:18) Like (2) Dislike (0) Reply
      @E. Leonard, boss you want to kill ah we wid more taxes. Ayu lord, lol. From the other side of my mouth though I understand the need and your point.
    • humph (13/11/2017, 03:35) Like (7) Dislike (1) Reply
      The only recovery tax I want to hear about is the one that will be repaid by the government ministers and their lap dogs who misappropriated funds which is the only reason why the country is in the predicament it is in right now.
  • Being Humble goes a long way (12/11/2017, 01:31) Like (2) Dislike (2) Reply
    The problem with my people in the BVI is that there's a lot of empty barrels making a lot of noise. The arrogance and ignorance is passed on from generation to generation from the lowest levels all the way up. Even with the Hurricanes the bloggers and politicians remain un-humbled and arrogant making it difficult for people to want to help. Even within families its hard getting our relatives to understand how the words they utter are viewed as harmful to those who want to help with extrapolate and apply that mentality to the rest of the population..this gives you a picture of what the rest of us see from the outside looking in.

    Make no mistake that potential investors and offshore companies are reading these online news feeds to get a sense of the overall culture in the BVI.... AND IT AIN'T PLEASANT!
    • Bruce (12/11/2017, 15:01) Like (0) Dislike (1) Reply
      @being humble. Bull crap! Off shore companies don't care what people are saying, all they want is a rock to hide their money. You should know that.
      • @Bruce (12/11/2017, 20:45) Like (1) Dislike (0) Reply
        Your response is exactly the kind of behavior of which I speak! Yes, they may register in the BVI but will they choose to employ/in-source labor within the BVI? I am praying for a change in attitude in my home country.
  • Clueless (13/11/2017, 03:32) Like (4) Dislike (0) Reply
    Transparency of tax and openness of shell companies??? Here we go again. They are again trying to label the BVI as a tax haven. Whilst taxes do not apply to BVI offshore business, people are taxed onshore. That's the way its been forever...need more transparency there? In addition to revenues from onshore tax, you have revenues from the financial services and tourism industries. You also have the bank of social security, the income of which derives from my pay check! The bank that the government always dipping into. The revenues are obviously there because government had money to waste to overspend on pier park, hospital, they give away 7 million, they build a 1 million dollar wall and they steal the rest. The question on transparency should be on as it relates to where the hell all the money went NDP!!!

    As for implying some shell company facade, all BVI registered companies are required to file registers of directors and ultimate beneficial owners, against whom strict regulatory and compliance reporting procedures apply, also there are strict regulatory regimes and common tax reporting standards which BVI has continued to comply with on an international level, so what the heck is the question on transparency there?

    I don't think that Premier understood the debt and significance of the allegations in that Minister's questions. Sounds clueless

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